APC implementation delays appear to be over; get ready for July 1, 2000

Last-minute changes are possible, but prepare now or be overwhelmed

Health information management (HIM) professionals may think of Chicken Little when they keep hearing, "The APCs are coming. The APCs are coming." They are warned to be prepared, but then the deadline for the implementation of the final ambulatory payment classifications (APCs) for ambulatory surgery centers and hospital-based outpatient facilities keeps changing. After all, it was originally set for January 1999.

That date was pushed back to July 1, 2000. Providers, though, have reason to heed this deadline. Conversations with officials from the Health Care Financing Administration (HCFA) in Baltimore still indicate a commitment to the July 1 date, says David Fee, MBA, product manager for ambulatory care products for 3M in St. Paul, MN.

"All HCFA has to do is publish its final rule and give us 90 days notice," says Danelle Kelly, RN, CPC, CPC-H, a consultant with D J Kelly & Associates in Schaumburg, IL. "That could literally be any time."

She does not think it will happen before July, though. "HCFA said it wanted to implement the editing of the modifiers starting in April and get that cleared up before it started on APCs."

Both Fee and Kelly expect some significant changes to the final rule from the proposed regulations published in the Sept. 8 Federal Register. If providers wait until the final rule is published to start their preparations, however, they will be overwhelmed with the coding changes they have to make.

That’s why providers should determine what codes can be added to their chargemasters now and what codes, such as those for surgical procedures, must be coded by the medical records department at a later date, Kelly says.

"Are you identifying all the procedures that can be done within your emergency rooms and outpatient clinics?" she asks. Some clinics may routinely be doing procedures that could easily be coded and put in the chargemaster.

"That’s how your reimbursement is going to be driven — off your CPT (common procedure terminology) codes," Kelly says. "You have to start with the ones that can be done in your chargemaster vs. those that must be done by medical records. If you don’t have some of them in your chargemaster, your medical records department is going to have an overwhelming amount of work [when the final rule is implemented]."

She also recommends that providers make sure that they have all of the modifiers in place for their radiology procedures. "Radiology and any of the 90,000 series of CPT codes are usually the ones that are already in your chargemaster." The modifiers for physical therapy, occupational therapy, and speech therapy also are easily put into the chargemaster, she adds.

When Fee talks with providers about APC preparation, he says the key issue is not to provide any service without having the diagnosis code or a reason for providing that service. "Hospitals write off thousands of dollars of billing that they could submit if they had a diagnosis code," he says.

Fee also advises providers to form an APC preparation committee, comprised of key decision makers in the organization. This committee should dig into the detail of the regulations and make a financial analysis of what it means to that facility. "In the end, they need to understand the detail."

When analyzing the impact APCs will have on the facility, committee members should compare their numbers against those of other hospitals around the country since much of the reimbursement is built around national averages, Fee says. "Whether the regs change or remain the same, when you start comparing yourself to other hospitals to see how you fare, the answers will be close enough that you can start making some changes."

One tool that might help with the financial analysis is a forecast of APC reimbursement impact by state, published in a report last July by San Francisco-based Market Insights. One of the co-founders of the company says he was "shocked" by the difference between states.

For example, the impacts ranged from 8.8% in Delaware to -49.9% in Alaska. (For more information about the report, see Web site http://www.market insights.com or call (800) 693-9976.)

Since information flow will change with the final regulations, providers also should understand what technology they will need and how they are going to use the new data so they can start modifying their systems or work with their vendors to accommodate those issues.

And finally, providers can’t omit another important piece of the puzzle when talking about APC preparation: physician education. "Physicians need to be educated so they all have the same information," Fee says. "You must try to make the physicians understand how the payment system works and what that means to the institution."

Physicians respond well to data, especially if they show how they compare to other physicians. "Physicians believe data; they don’t believe hearsay," Fee says.

"You can have information that says, Here’s how all the physicians are performing.’ You don’t put names on it, but you start publishing it and soon everyone has figured out where they stand. That type of feedback is very effective."

While providers may be hurrying to prepare for APC implementation, Kelly doesn’t think many will take advantage of the copay reduction in the first year. HCFA is allowing providers to reduce the copayment to their Medicare beneficiaries and use it as a marketing tool for outpatient services.

"There is so much to do with APCs. And they’re so different from what providers have done in the past that I don’t think copay reductions starting in the middle of the calendar year will have as big of an impact as those that start the following January 2001," says Kelly. "Because APCs are starting in the middle of the year and not in January, additional instructions need to come from HCFA with regard to the 90-day notification to the FI [fiscal intermediary]."

Providers need to realize that if they elect to reduce the copay on an APC, they must reduce it on the entire APC, not just a portion of it, she adds. And they have to inform their FI of any intended reductions prior to 90 days of the beginning of the calendar year, although many providers have fiscal years ending in July or October. "Halfway through their fiscal year they would have to make this copay reduction. That’s why I think most of them will wait during the first year."

Once providers make the decision to reduce any copays, their FIs will find themselves bogged down in making all the changes. "The FIs have to tailor that information into their system for each hospital that they service. That surprised them. That’s a lot of detail," Kelly says.

[The complete regulations can be reviewed on the FederalRegister On-Line (Sept. 8, 1998). Web site: http://www.nara.gov./fedreg.]